Frequently Asked Questions
Rule 806 - Emission Reduction Credits
* means that the question is taken out of Section 8 of the NSR
Staff Report.
For more information or assistance, call the Engineering Division at
(805) 961-8800, or e-mail us at
engr@sbcapcd.org.
Q: How will the RACT discount of ERCs be applied?
A: EPA requires ERCs to be discounted by reasonably available control
technology (RACT) at the time of use. RACT discounting of ERCs accounts for
any advances in emission control techniques and ensures that emission
reductions are consistent with APCD prohibitory rules and control measures
relied upon in the clean air plan. To comply with this requirement, the
District will apply the RACT discount to ERCs as they are entered into the
source register and, if RACT changes between the date the ERCs were
deposited and the date used, again before the ERCs are used to reflect any
change in the amount of the RACT discount. This allows the value of ERCs in
the source register to reflect close to their actual value instead of an
inflated value that has yet to be reduced by applicable RACT discounts. In
the event that an applicable RACT requirement is relaxed, the ERCs will be
adjusted accordingly at the time of use.
Q: Can a source use/bank post-1990, pre-rule adoption emission
reduction credits?
A: No. To qualify as an emission reduction credit, an application must be
submitted to the APCD and found to be complete before the emission
reductions take effect (see Rule 806.D.3). This provision is essential to
assuring that the ERCs meet the core requirements for banking (that is, that
the ERCs are surplus, quantifiable, enforceable, and permanent.)
Q: Can a source use/bank pre-1990 emission reduction credits?
A: The source can use the credits only if the credits were specifically
identified as a credit (growth allowance) in the 1994 Clean Air Plan, comply
with Rule 804, and meet the requirements of the old banking agreement. To be
banked, the emission reductions must also comply with Rule 806.
Q: Can a banked emission reduction credit be returned to the bank at
its full value?
A: Once a banked emission credit is put into use in order to meet an
emission offset requirement, the emission reduction credit is retired from
the bank. Should the source that is using the credit find it no longer needs
the credit, say for example the source shuts down an emission unit, the
operator must submit an application for an entirely new emission reduction
credit, and the source of the reductions, in this example the shutdown of an
emission unit, must qualify the reductions as emission reduction credits in
accordance with the provisions of Rule 806.
Q: Can sources in the petroleum production industry be shut-down and
the emissions banked?
A: Yes, sources in the petroleum production industry can be banked.
However, in accordance with Rule 806, and U.S. Environmental Protection
Agency policy, the reductions must be permanent and surplus to the Clean Air
Plan
Q: How are ERCs determined when the existing equipment creating the
ERCs is replaced?
A: The answer to this question requires that the following two questions
be addressed:
- Is the replacement project exempt per Section D.9 of Rule 202 (i.e., is
it an equivalent
routine replacement)?
- Does the replacement equipment trigger offset requirements for the
stationary source?
If the replacement project qualifies as an equivalent routine
replacement, the replacement equipment is not subject to New Source Review
provisions of Regulation VIII. An ERC Certificate is not issued for
the existing equipment being replaced because emissions are not being
reduced and the new replacement equipment is not subject to NSR.
If the replacement project is not an equivalent routine
replacement, the replacement equipment requires an ATC permit and is treated
as a new project subject to New Source Review. Also, BACT, AQIA and offsets
may be required, depending on the potential to emit of the project and the
stationary source NEI.
When a replacement project triggers offsets, there are two permitting
routes that the applicant can pursue. The first route is to treat the
existing equipment being replaced and the replacement equipment as separate
projects. An ERC Certificate application is submitted for the equipment
being replaced and an ATC permit application is submitted for the
replacement equipment. If the ATC permit requires offsets, the required ERCs
may be obtained from the ERC Certificate created by the existing equipment
being replaced. The second route is to use the actual emission reductions
from the existing equipment being replaced as the D term in the NEI equation
(re: NSR rule staff report, April 17, 1997, Section 8: Netting for
Nonattainment Pollutants). In this case, the actual emission reductions
are used to net out of offsets in both steps in the application of the
dual-source definition (ibid.). Resulting values of NEI below zero
may qualify as actual emission reductions for granting an ERC Certificate
pursuant to Rule 806.
For more information or assistance, call the Engineering Division at
(805) 961-8800, or e-mail us at
engr@sbcapcd.org.
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